Social Media Spending Threatens To Overtake Paid Search Among SMBs

Borrell Associates has come out with an extensive new report about small business (“SMBs”) and social media adoption. It contains forecasts and spending estimates as well as other data about SMB usage of social media as a marketing tool.

There’s a great deal of data already in the market about SMB adoption of social media. What they show is that between 45 percent and 70 percent of SMBs say they already have a presence on social media sites (mostly Facebook).

Borrell reports that between 60 and 64 percent of SMBs have a formal presence on social media sites. An earlier 2011 study by Palore found that 58.2 percent of SMBs are on either Facebook or Twitter. And a late-November survey from MerchantCircle found that about 70 percent of SMBs said they promoted themselves using Facebook.

Borrell also found that social media marketing was just behind paid-search for SMBs in 2011. Given the ambivalence that many SMBs feel about paid search (though not organic) one could expect that social media advertising and other promotional spending would surpass paid search in 2012.

Borrell’s report estimates that roughly $6.2 billion was spent in 2011 on social media advertising (all in) and that Facebook captured or saw about 65 percent of that. The SMB-specific component of social media spending is smaller, roughly $1.14 billion, according to the report.

Another interesting piece of data in the report is the way that SMBs measure social media success or ROI. Most use “new customers” as the key metric (it’s not clear how many actively or successfully track that however). Additional fans/followers comes in at number two.

Borrell says, “On average each [SMB] has a network of more than 4,000 friends and followers. But this statistic is skewed by a few respondents who claim tens of thousands or more. Perhaps a better gauge is the median reported: about 250 followers.”

Yet even 250 fans/followers is probably more than a substantial percentage of SMBs have on their pages. The mid-2011 Palore study argued that about 38 percent of SMBs on Facebook had very few fans/Likes and very little engagement. The percentage of SMBs showing limited follower activity was even larger on Twitter (44.5 percent).

The Borrell report illustrates the increasing demand for social media marketing among SMBs. However it doesn’t explore the gap between that demand and the often ineffectual or inept social media efforts of those same businesses.